What’s happening in the property markets this month

Business closures, a rapidly rising unemployment level and a plummeting share market have been the immediate major impacts of the unprecedented government measures put in place in March to stop the spread of the coronavirus. The government restrictions also include measures that will directly affect the real estate market in Australia. Auctions and open house inspections were banned from midnight on Wednesday 25 March for the foreseeable future. Almost 2,600 auctions that were scheduled to go ahead in the last weekend of March alone across Australia were immediately cancelled. Buyers, sellers and agents will have to rely on online auction, virtual property tours and private inspections while the restrictions are in place.

Many lenders (including the big 4 banks) are also offering coronavirus home loan relief packages to borrowers, enabling them to suspend their repayments for up to 6 months. Almost lost in all of the other coronavirus news was the decision of the Reserve Bank to cut interest rates by a further 0.25 per cent in early March. This is the fourth interest rate cut in Australia since mid-2019.

SYDNEY NSW

AMP Capital Chief Economist Shane Oliver has forecast that Sydney (and Melbourne) house prices could drop by 20% due to rising unemployment levels.

According to the latest research from the University of Sydney, approximately 20% of Sydney home owners and 33% of Sydney renters were already in a mortgage or rent stress situation’ (paying more than 30% of their income in mortgage payment or rent) before the onset of the coronavirus. These percentages will be increased by the coronavirus fallout.

CoreLogic research reveals that only 7.1% of Sydney properties are currently cheaper to buy than to rent, consolidating the Harbour city’s position as the least affordable market to buy in Australia.

MELBOURNE VIC

Domain data reveals that over half of Australia’s cancelled auctions due to the coronavirus ban were to be held in Melbourne.

According to research from Domain, it’s currently cheaper to buy than rent in 19 Melbourne suburbs. Apartments in inner-city locations are the most affordable, especially in the CBD, Travancore and Carlton. Houses are currently more affordable to buy than rent in suburbs such as Meadow Heights and Dallas.

The Westpac-Melbourne Institute Index of consumer confidence fell to a 5-year low during March, recording its second-lowest reading on record. The lowest was at the height of the Global Financial Crisis (GFC) during 2007/2008. The associated ‘House Price Expectations’ Index also fell sharply during March.

BRISBANE QLD

The Brisbane property market will be less affected by the ban on on-site auctions than capital cities like Melbourne and Sydney as Domain statistics show that only 5% of Brisbane properties are currently sold this way, compared to 26% in Melbourne and 16% in Sydney.

The Brisbane City Council has announced that ratepayers struggling to pay their rates over the coming months due to the coronavirus fallout will be able to access deferred payment plans. Penalties for late payments will also be temporarily abolished.

The average selling time for a property in Brisbane is currently 50 days according to the latest CoreLogic figures, and list prices are being discounted by an average of 4% by sellers to make a sale.

PERTH WA

Research from the Real Estate Institute of Western Australia (REIWA) reveals that median Perth rents have risen for the first time in 3 years (by $10 per week). Vacancy rates have also dropped to 2%, their lowest level since 2013.

The Western Australian government has placed an immediate freeze on household electricity and water charges in response to the coronavirus crisis.

CoreLogic’s data reveals that median Perth property prices recorded 4 months of consecutive increases between November and the end of February, the first time this has happened since the market peaked in mid-2014. However, the increases were only small, and they occurred before any coronavirus restrictions were put in place.

CANBERRA ACT

Current Australian Bureau of Statistics data reveals that Canberra currently has the lowest unemployment rate in Australia. It also has the highest percentage of government workers, so its unemployment rate is likely to be less affected by the business closures happening around Australia. Its property market may be more resilient during the coronavirus aftermath as a result.

The latest CoreLogic research reveals that median Canberra property prices are at record highs after growing by 3.1% over the past year and by 23.3% over the past 5 years.

The ACT government is offering $150 rate rebates to all Canberra homeowners as part of their coronavirus stimulus package.

ADELAIDE SA

The South Australian government’s response to the coronavirus crisis includes road infrastructure projects being brought forward to provide jobs and stimulate the local economy.

Although the Adelaide property market has been relatively flat over the past year, median prices are still at record highs based on the latest CoreLogic data. Over the past 5 years, Adelaide property prices have increased by 10.8%.

However, according to the latest Australian Bureau of Statistics research, South Australia currently has Australia’s highest unemployment rate. This situation will likely be exacerbated by the economic impacts of the strict coronavirus measures (as it will in all Australian States and Territories), placing downward pressure on Adelaide property demand and prices.

DARWIN NT

According to research from CoreLogic, 77.6% of properties in Darwin currently have an estimated mortgage payment that’s cheaper than median rent levels. This makes Darwin the most affordable capital city to buy in Australia, which is one positive of the 30% fall in property prices that the city has experienced since its market last peaked in 2014.

The latest figures from CoreLogic reveal that current rental yields for investment properties in Darwin are the highest in Australia 6.2% for units and 5.3% for houses).

The Northern Territory Government has announced a home improvement scheme as part of their response to the coronavirus crisis. Grants of up to $6000 will be made available to eligible Territory homeowners and landlords.